NAB slashes financial adviser licence fees to zero

National Australia Bank has temporarily waived 100 per cent of the licence fees paid by aligned financial advisers, as it expands its suite of coronavirus relief packages and prepares to sell its wealth management operations.

Geoff Lloyd, the chief executive of NAB's wealth subsidiary MLC, informed the bank's network of financial advisers on Tuesday of major fee relief, billed as a "support package for you in this time of crisis".

Under the updated terms, financial advisers licensed by the bank's various "dealer groups" will pay no licence fees between April 1 and June 30, and just 50 per cent of their licence fees from July to September. Firms will continue to pay professional indemnity insurance fees.

"This period isn’t like any other market correction or community health issue," Mr Lloyd wrote in the communication, seen by The Australian Financial Review.

"I have decided this unique time requires a different response. This adviser support package is all about reducing pressure so you have more time with clients. It recognises the community importance of your role in this crisis, and I hope it helps."

Related Quotes

Advertisement

Mr Lloyd also announced deadline extensions for migration of client accounts to new wealth platforms and fixed fee agreements, which were slated for late March and have been postponed to May and July respectively.

Those firms with debt arrangements with the bank may also qualify for SME relief announced over recent weeks, Mr Lloyd said.

The relief measures could make MLC lose fee revenue of about $9 million, based on the estimate of average licence fees of between $45,000 and $50,000 a year charged by the large bank-owned wealth managers, according to data from research house Adviser Ratings. However, NAB sources said the figure was probably closer to $5 million.

Advertisement

The bank has about 1000 financial advisers under its control, down from about 1600 in January 2019. It lost 25 per cent of its network last year following the Hayne royal commission.

About half of those advisers are understood to be eligible for the stimulus package as self-employed firms operating under its licences, while the rest are salaried advisers employed by NAB.

The announcement was warmly received by many of the relevant firms, and there was a flurry of emails from authorised representatives expressing gratitude. One referred to having read Mr Lloyd's update "through tears", according to bank sources.

But others with knowledge of the matter said the waiver followed a period of tension within the network over the mandatory transitions to new platforms and fee arrangements, which some feared would result in lost client income.

“This is not just about coronavirus generosity; it is about the advisers being less than happy about the changes,” said one.

Another complained that the revenue hit to MLC from the waiver would be dwarfed by the grandfathered commission revenue, which could no longer be paid to advisers under the federal ban introduced in October.

How the coronavirus is changing markets, business and politics.

Aleks Vickovich is the wealth editor. He writes about financial advice, superannuation, investment and regulation from the Financial Review's Sydney newsroom. Connect with Aleks on Twitter. Email Aleks at aleks.vickovich@afr.com

More than 10,000 people poured into the nation's capital on the ninth day of protests over police brutality, but what awaited them was a city that no longer felt as if it was being occupied by its own country's military.